PC prices set to tumble in tightening economy

The worldwide PC market grew at a healthy 15.3 percent in the second quarter but the weak economy means tough times and possibly a wave of consolidation may lie ahead for PC makers, according to surveys released on Wednesday.

Agam Shah
July 17, 2008

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The worldwide PC market grew at a healthy 15.3 percent in the second quarter but the weak economy means tough times and possibly a wave of consolidation may lie ahead for PC makers, according to surveys released on Wednesday.

Strong laptop sales helped Europe, the Middle East and Africa (EMEA) report strong double-digit growth, IDC said, but the weak economy has already started taking its toll on the US, where belt-tightening among businesses and consumers has led to PC shipment growth in the low single digits, according to figures from IDC. Growth in Asia was roughly 15 percent.

Gartner, which also released its figures Wednesday, said the weak economy has forced PC makers to slash prices in order to stay competitive. That's good news for end users but could mean the end for smaller PC makers if the trend continues.

"The industry could ultimately see a significant wave of consolidation if stronger vendors continue to press their pricing advantage." Gartner said.

The leading PC makers can reduce their costs by working with suppliers to get better deals, but smaller PC vendors don't have that type of leverage, said David Daoud, an IDC research manager.

Shipments in EMEA grew 23.5 percent, while shipments in Asia-Pacific climbed 18.1 percent, according to Gartner. Laptop sales were particularly strong, growing 40 percent worldwide, it said. Worldwide, HP retained its spot as top PC vendor, shipping 13.32 million units for an 18.9 percent share of the market, up 16.8 percent year-over-year. Dell, in second place, shipped 11.56 million units for a 16.4 percent market share and a 21.4 percent year-over-year increase. Acer witnessed a sharp 63.5 percent year-over-year rise, putting it in third place with 6.97 million units shipped. Lenovo and Toshiba came fourth and fifth, respectively.